Ben Company has the following sales forecast for the next quarter: April, 20,000 units; May, 24,000 units; June, 28,000 units.Sales totaled 16,000 units in March.The March finished goods inventory was 4,000 units.End-of-month finished goods inventory levels are planned to be equal to 20 percent of the next month's planned sales.
-The planned production for Ben Company for April is
A) 19,200 units.
B) 20,800 units.
C) 21,200 units.
D) 24,800 units.

Question

Ben Company has the following sales forecast for the next quarter: April, 20,000 units; May, 24,000 units; June, 28,000 units.Sales totaled 16,000 units in March.The March finished goods inventory was 4,000 units.End-of-month finished goods inventory levels are planned to be equal to 20 percent of the next month's planned sales. 
-The planned production for Ben Company for April is
A) 19,200 units.
B) 20,800 units.
C) 21,200 units.
D) 24,800 units.

Quizplus · Accepted Answer

To calculate the planned production for April, we need to follow these steps:

1. Calculate the total demand for April:
April demand = 20,000 units (as given in the sales forecast)

2. Calculate the required production for April:
Required production = April demand - March finished goods inventory + planned ending inventory
Planned ending inventory for May = 0.2 * May demand = 0.2 * 24,000 = 4,800 units
Required production for April = 20,000 - 4,000 + 4,800 = 20,800 units

Therefore, the planned production for Ben Company for April is 20,800 units, which is answer choice B.

Ben Company Has the Following Sales Forecast for the Next